Release of additional instalment of Dearness Allowance to Central Government employees and Dearness Relief to Pensioners due from 1.1.2016

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved release of an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to Pensioners w.e.f. 01.01.2016. This represents an increase of 6 percent over the existing rate of 119 percent of the Basic Pay/Pension, to compensate for price rise.

This will benefit about 50 lakh Government employees and 58 lakh pensioners.

The increase is in accordance with the accepted formula, which is based on the recommendations of the 6th Central Pay Commission (CPC). The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be of Rs. 6796.50 crore per annum and Rs.7929.24 crore respectively, in the financial year 2016-17 (for a period of 14 months from January, 2016 to February, 2017).

“The first AICPIN points of 2016 will be released tomorrow”

The Dearness Allowance given to Central Government employees and Pensioners will henceforth be calculated on the basis of the 7th Pay Commission recommendations from 1.1.2016.(Expects its recommendations to be implemented by the Government)

The first All India Consumer Price Index – CPI (IW) Base Year 2001=100, used for calculating the Dearness Allowance will be announced tomorrow by the Central Government.

The current DA, according to the 6th Pay Commission, began at zero on 01.01.2006, and ended at 125%. It will restart again at zero from 01.01.2016 onwards.

There is no Dearness Allowance for the six months from January to June 2016.

From July 2016 onwards, the new and first Dearness Allowance will be announced based on the recommendations of the 7th Pay Commission. In other words, the Dearness Allowance for the six months between July and December 2016 will be based on the fluctuations in the prices of essential commodities, called the AICPIN points, between January and June 2016.

The 7th Pay Commission has not prescribed any dramatic changes in the method of calculation of the Dearness Allowance. Instead, the previous method is all set to continue.

But, final announcements will be made in this regard only after the Central Government makes its decisions clear.

Expected DA on 1.1.2016 is Over – Ends with 6% Hike at 125%

Expected DA ends with a 6percentage hike at 125%; Labour Bureau releases the much-awaited AICPIN stats of December

The monthly AICPIN statistics points for the month of December 2015 has been released by Labour Bureau. The index is one point decreased and ends with 269. The AICPIN points for the months of July 2015 till December 2015, has concluded with some ups and downs. The AICPIN points that started at 263, has ended on an average of 261.4 points (263, 264, 266, 269, 270, and 269).

Since all the AICPIN points required for calculating the DA for the months of July to December have been released, the additional Dearness Allowance, which will be issued from the month of January 2016, has been decided. It will be implemented only after the central cabinet gives its approval.

The final instalment of the DA, to be issued as per the recommendations of the 6th Pay Commission, will see an increase of 6 percent and end at 125%. With this, it concludes its 10-year-long journey.

Starting from January 2006, Dearness Allowance was revised 20 times based on the method recommended by the 6th Pay Commission. It began at zero on 01.01.2006, and increased, step by step, to 125 percent by 01.01.2016. In other words, there was an average increase of 6.25 % each time.

Since the final instalment of DA percent and the 2.57 Fitment Factor, recommended by the 7th Pay Commission, are closely related to each other, there is tremendous curiosity to know about it.

It is surprising that the 7th Pay Commission had very accurately predicted the rise.

Based on the recommendations of the 7th Pay Commission, the basic pay of all the Central Government employees will be calculated, with effect from 01.01.2016. There will be no dearness allowance for the six months starting from January to June 2016. The first instalment of the Dearness Allowance will be issued from July onwards.

The 7th Pay Commission has not recommended any changes in the DA calculation method. Therefore, the method implemented by the 6th Pay Commission will be used.

Based on the AICPIN points of January to June 2016, the additional DA will be calculated and will be given as the first instalment of the new DA.

It is being said that only after seeing the report submitted by the 13-member Empowered Committee constituted by the centre will the government decide on implementing the 7th Pay Commission reports.

The All-India CPI-IW for December, 2015 decreased by I point and pegged at 269(two hundred and sixty nine). On 1-month percentage change, it decreased by (-) 0.37 per cent between November and December, 2015 which was static between the same two months a year ago.

The year-on-year inflation measured by monthly CPI-IW stood at 6.32 per cent for December, 2015 as compared to 6.72 per cent for the previous month and 5.86 per cent during the corresponding month of the previous year. Similarly, the Food inflation stood at 7.94 per cent against 7.86 per cent of the previous month and 5.73 per cent during the corresponding month of the previous year.

At centre level, Ludhiana reported the maximum decrease of 7 points followed by Ahmedabad and Rourkela (6 points each), Tripura, Varanasi, Lucknow and Kodarma (5points each). Among others, 4 points decrease was observed in 9 centres, 3 points in 4 centres, 2 points in 11 centres and 1 point in 12 centres. On the contrary, Quilon recorded a highest increase of 7 points followed by Warangal (4 points), and Rangapara-Tezpur, Chhindwara and Mundakkayam (3 points each). Among others, 2 points increase was observed in 5 centres and 1 point in 9 centres. Rest of the 16 centres’ indices remained stationary.

The indices of 37 centres are above All-India Index and other 40 centres’ indices are below national average. The index of Jabalpur centre remained at par with All-India Index.

The next issue of CPI-IW for the month of January, 2016 will be released on Monday, 29th February, 2016. The same will also be available on the office website www.labourbureaunew.gov.in.

Expected DA Calculation will play vital role in determining Fitment Factor of 7th CPC

Expected DA from January 2016 likely to change the Fitment Factor of 7th CPC

At the end of the Sixth CPC Regime all the Central Government servants are at the verge of receiving their last installment of Dearness Allowance in Sixth Pay Commission. Almost the DA from January 2016 will be finalized after the release of AICPIN for the month of December 2015. The eleven months AICPIN Points released from January 2015 to November 2015 by Labour Bureau suggests that there is a possibility to get 6 to 7 percent hike in DA from January 2016. But the AICPIN for the Month of December will determine the exact rate of hike in Dearness Allowance from Jan 2016.

The rate of DA, as expected by 7th Pay commission, if arrived at 125 % with 6% hike there will be no change in Fitment factor. Because the Fitment Factor 2.57 is arrived by adding the 125% DA, at the rate anticipated on 1.1.2016. If AICPIN for December 2015 necessitates changing the expected DA from 125% to the level of 126 % with hike of 7%, then there will be certainly an impact in the Fitment Factor of 7th CPC. In that case, there will be change in decimals of fitment factor

So, Expected DA from January 2016 will play vital role in determining Fitment Factor if it increases from expected level of 125% to 126%.

What will be the fitment factor if DA reaches at 126% from January 2016.

When it was anticipated that the DA will be 125 % from January 2016, The 7th Pay Commission stated in the Report that

“This fitment factor of 2.57 is being proposed to be applied uniformly for all employees. It includes a factor of 2.25 on account of DA neutralization, assuming that the rate of Dearness Allowance would be 125 percent at the time of implementation of the new pay. Accordingly, the actual raise/fitment being recommended is 14.29 percent”

If 126% of DA has to be taken into account for arriving Fitment factor with the recommended 14.29 % increase..

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